The sizzling innovative drug sector has magnetized heavyweight capital inflows. Xingquan Fund recently upped its stake in Hong Kong-listed InnoCare Pharma to 5%, triggering mandatory disclosure requirements. This strategic move epitomizes a broader scramble among mainland institutions for Hong Kong's biotech gems, with E Fund, Ruifu Capital, and private equity firm Shennong Investment all executing similar plays earlier this year. The explosive sector rally has delivered windfall profits: seven of this year's top-ten performing public funds owe their stellar returns to heavy biotech allocations.

Hong Kong Exchange filings revealed Xingquan Fund acquired 1.452 million InnoCare shares at HK$13.766 apiece on July 10, lifting its stake to 5.08%. At July 15's closing price, this position boasted a market value of HK$1.329 billion. Institutional enthusiasm for InnoCare runs deep – 25 mainland funds held its Hong Kong shares by Q1 2025, while 15 funds invested in its A-shares. Star fund manager Xie Zhiyu's InnoCare position in his flagship product ranked eighth among A-share holders.

InnoCare's investment case shines brightly. Co-founded by renowned scientists, the hematology-focused biotech saw its crown jewel Obinutuzimab surge 89.2% year-over-year to generate RMB310 million in Q1 2025 sales – over 80% of total revenue. The company swung to profitability during the quarter, posting RMB179.7 million net income. Unlike cash-strapped peers, InnoCare sits on a formidable RMB6.327 billion war chest, fueling its robust pipeline including the promising CD19 monoclonal antibody tafasitamab.

The biotech gold rush extends beyond InnoCare. Shennong Investment seized a 5.01% stake in CARsgen Therapeutics in March despite widening losses, a bet now yielding 65% paper gains. E Fund aggressively accumulated shares in Joinn Laboratories before paring its position to 4.21% by late April. Ruifu Capital steadily boosted its exposure to traditional Chinese medicine player Gushengtang, lifting its stake to 8.02% in April.

Hong Kong's biotech index has skyrocketed over 70% this year, turbocharging specialized funds. Standouts include Huatai-PineBridge Hong Kong Advantage Selection (up 101.67%), Great Wall Healthcare Industry Selection (94.55%), and BOC Hong Kong Stock Connect Healthcare (85.51%). Their portfolios glitter with biotech rockets: RemeGen soared over 300%, while Kelun-B and Innovent Biologics both doubled.

Fundamentals validate the frenzy. Innovent Biologics narrowed losses dramatically on 51.8% revenue growth in 2024, while breakthrough data for its IBI363 therapy at June's ASCO conference prompted Citigroup to hike its target price 50%. Commercial-stage players like Akeso and BeiGene now generate sustainable revenue streams. With licensing deals hitting record levels – Q1 2025's $36.9 billion nearly matched 2023's total – the capital influx into Hong Kong's biotech arena shows no signs of abating.